U.S. chief executives assess tax reform;

Page 1

Should there be tax reform?
Here are the opinions of
chief executive officers from
a significant sampling of the
Fortune 500. This survey
sought their response to
possible changes in the
income tax, the capital gains
tax, double taxation of cor­poration
earnings, the
investment tax credit, and
various taxes paid by multi­national
businesses.
While the overall findings
of the survey are not
startling, the individual com­ments
do offer an insight
into the thinking of the 53
executives who were inter­viewed.
The Fortune 500
Survey was commissioned by
Touche Ross and conducted
by Research and Forecasts,
Inc. with the assistance of
Professor Gerald P. Grady of
the Columbia University
Graduate School of Business.
Are there realistic
alternatives to the
income tax, such as
a tax on sales, value
added, net assets,
or cash flow?
"This dependence on the income
tax will continue, since, in my
opinion, it is the fairest way
provided that is straightforward,
understandable, and gives the
taxpayer an even break."
"Whatever choices and trade-offs
are made by Carter and Congress,
the new tax system must not destroy
incentives to make capital invest­ments,
to assume business risks, and
to be productive and successful."
"Unfortunately, given the American
political system, we must rely on the
income tax. If it were politically
possible, the value-added tax (VAT)
would be great, because the cost
would automatically go through to
the consumer."
"VAT is a good alternative—it's the
fairest type of tax—but not political­ly
realistic in the U.S. We are stuck
with the income tax."
"I personally favor a tax on con­sumption.
A true consumption tax
would be more equitable than a
sales tax. However, a national sales
tax would get at the problem and
would make some sense."
"The VAT or the sales tax as a
substitute for the income tax would
be an impractical idea,since both are
regressive and would tend to hit the
lower income wage earner the
hardest."
"The taxation of cash flows would
involve taxing depreciation, thereby
impeding modernization of our
capital equipment A system
which taxed assets would probably
serve as a disincentive to saving."
RESULTS: 83 percent favor income
tax over a tax on consumption; 49
percent choose income tax because
of political realism; 66 percent
recommend revising income tax.